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Settlement – entire agreement |
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Most of us are familiar with entire agreement clauses in the context of
commercial contracts. In essence, an entire agreement clause is an
attempt to exclude any future claim based on statements made during
negotiations.
Litigators should also not overlook the usefulness of entire agreement
clauses. They can be of great assistance when settling a dispute
especially when the dispute has been acrimonious or reached after
prolonged negotiations. This was illustrated by a recent case involving
an agreement after a protracted mediation. The settlement agreement
contained an entire agreement clause that was designed to prevent
claims arising from representations or statements made during the
negotiations. It said the settlement agreement constituted the entire
agreement between the parties; that the parties had not relied on any
oral or written statement or representations made during the course of
negotiations (other than those recorded in the agreement). It added that
there would be no right in relation to any statement or representation,
unless such statements or representations were made fraudulently.
Subsequently, one of the parties announced that it would not be held by
the agreement, on the basis that fraudulent representations had been
made – although the allegations of fraud were subsequently dropped.
What emerged, at the end of the day, was fairly predictable: in the
absence of proving fraud, it would not be possible to set the agreement
aside. Negligent misrepresentations are not enough to thwart the
operation of an entire agreement clause. Having an entire agreement
clause is reasonable in such circumstances and accordingly it will be
enforceable. Crystal Decisions v Vedatech [2007] EWHC 1062 (Ch)
discussed in [2007] The In-House Lawyer July/August p39. © Practical Lawyer
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September 2007 |